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The NRI entrepreneur with a $9 billion cheque. Some of it is for Air India

His US-based fund Interups Inc has submitted Expression of Interest for Air India.

December 15, 2020 / 05:47 PM IST
The government has offered for sale its 100 percent stake in AI and AI Express and the entire 50 percent in ground handling joint venture AI-SATS

The government has offered for sale its 100 percent stake in AI and AI Express and the entire 50 percent in ground handling joint venture AI-SATS


Laxmi Prasad learnt an important lesson during his stint as a premier agent at Prudential Financial in the US. He had moved to the US after a very successful stint in hometown Hyderabad as a chartered accountant. "At Prudential, our manager used to tell us, 'Get introduced to one client and you have seven cross-selling opportunities.'"

Prasad worked on that lesson. In 2001, he was ranked the top life insurance producer, generating the maximum commission, and was voted the rookie of the year among new agents.

Nearly 20 years later, and now as someone who is managing an asset base of $10.8 billion, Prasad is using the same principle in his bid for Air India, the state-owned airline that the government is selling. His Interups Inc, a fund based in the US, has put in an expression of interest to acquire Air India.

"It is the same am doing here," says Prasad from Delhi, where he has been camping for a while, and will be for the next 15 days as he prepares to submit the physical bid for Air India. He explains:

"It's not the profit in the airline industry that is attracting us. But the digitisation that will happen and the massive data generation that will help us expand in other services," says Prasad. In short, Prasad is banking on the airline business to generate a treasure trove of data that will help and complement Interups' other businesses, and also spawn more.

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It's a different take and rationale to buy an airline from what one has heard of till now. He neither talks about load factors, nor uses industry jargon such as CASK or RPK. And he is not worried about the thousands of crores that one would have otherwise thought any new owner of Air India would need to revive the airline's fortunes.

"We are ready to spend $9 billion in aviation in the next five years. Apart from Air India, we are in talks to buy a stake in a small airline in the UK, and will also invest in another beleaguered air carrier," says Prasad.  Giving a clue into what he is planning, Interups will park Air India's assets on an Infrastructure Investment Trust (InvIT) and these will be monetised.

Apart from aviation, Interups is also investing in farming - "We are investing millions of dollars. You will hear more from us within a year," he says, and in real estate. Interups is the only remaining bidder of Lavasa, the hill station project undergoing bankruptcy proceedings.

Earlier this year, it was in the running for Asian Colour Coated, which was bagged by JSW Steel, and had also bid for Delhi's Hotel Claridges and another hotel in Mahabalipuram.

In his personal capacity, Prasad has just completed an investment in a pharmaceutical firm in Hyderabad that is in talks to make the Russian Sputnik vaccine in India.

Laxmi Prasad, Chairman, Interups Inc Laxmi Prasad, Chairman, Interups Inc

The business

From where is Prasad getting the money?

After moving to the US in 1997, Prasad earned the certified public accountant, or CPA. By 2007, he was filing returns for 55 percent of Indian techies in the US. Opportunity knocked in 2016, when he acquired Interups, a shell company and used it as a vehicle to manage the retirement corpus of clients.

"About 1,350 of our clients today are physicians, 100 are professors and balance are software engineers. Mostly, NRIs," says Prasad.

His Interups now manages retirement accounts of over 27,000 clients in the US, mostly NRIs. This itself amounts to $1.96 billion. "There has been an 80 percent increase in the net asset value of this in the last 18 months because of our investment in gold. Our clients would now like to meaningfully invest that surplus money. That's why we are active in the market now," says Prasad.

While laws allow him to use 25 percent of this pool, Prasad says he also has strategic investors and "institutional support."

Overall, Interups has an asset base of $10.8 billion. "We have an aggressive target to grow this to $100 billion in the next five years," he says.

Interups is a listed company in the US. It is slated to have a profit surplus of $140 million this financial year. In its filing, the company said that it expects to generate a business of $516 million, $996 million and $1.48 billion in the next three financial years, starting from Fy21. The profit, the company estimates, will be  $271 million, $523 million and $779 million, in the three years, respectively.

A PTI report said that Interups was suspended from trading in the US since 2016 for not filing statutory information. "It was never suspended after we acquired the company," clarifies Prasad.

The Air India bid

Prasad doesn't say much further about the bid itself. But he has surely got people talking by offering a majority 51 percent stake in the consortium to Air India employees.

"It's surprising that someone who is bringing in the money, is willing to give up the controlling stake," says a senior industry executive.

Sources added that Interups may approach the 200 Air India employees who have formed a separate consortium to bid for the airline.

"But it can turn out to be a masterstroke," says the executive cited above. "Support of the employees and union will be critical to win the bid," he adds.
Prince Mathews Thomas heads the corporate bureau of Moneycontrol. He has been covering the business world for 16 years, having worked in The Hindu Business Line, Forbes India, Dow Jones Newswires, The Economic Times, Business Standard and The Week. A Chevening scholar, Prince has also authored The Consolidators, a book on second generation entrepreneurs.

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